A commercial photographer sets their price by combining a creative (or photography) fee with a licensing (or usage) fee. Some photographers list these fees separately, while others combine them into one total.
The creative or photography fee depends on the assignment’s complexity, the time required, the photographer’s talent and experience, and their business overhead.
The licensing or usage fee depends on how the client plans to use the finished images.
Creative fee + production expenses + licensing fee = total price
The creative fee covers the photographer’s business costs, while the licensing fee represents their business profit.
Think of it this way: a vehicle owner pays both ownership costs and operating costs.
Ownership costs include the price of the vehicle, registration, and insurance, and they don’t depend on how the vehicle is used.
Operating costs, such as gas, repairs, and maintenance, depend on how the vehicle is used.
In this analogy, the photographer’s creative fee is similar to ownership costs—it covers the cost of completing the assignment and doesn’t depend on how the images will be used. The licensing fee, on the other hand, is like the operating costs. It varies based on how the client will use the images.
Great explanation! I’m in the process of starting up my photography business and I have been conflicted with licensing. My town is small and business’ don’t usually set aside large amounts towards a creative/marketing budget. Shoot, some don’t even understand licensing!
This is where I’m conflicted. Do I add in usage which is included in my creative fee or do I create an additional line item? Say my creative fee for a minimum of 3 hours is $450. Should I throw in 1 year’s unlimited web use or should I add that as an additional line item fee? Oh the choices!
I also have Fotoquote. It’s a great tool for creating licenses/fees for individual images but it can be pretty confusing when dealing with assignments images in bulk. Sigh. :)
Thanks for your comments, Patrick.
>> re: “My town is small and business’ don’t usually set aside large amounts towards a creative/marketing budget. Shoot, some don’t even understand licensing!”
That’s always a problem. Although most folks understand licensing when it comes to software, DVD movies, music, books, etc.
Many customers often just want the bottom-line price. They don’t care about how much for this or how much for that. Except when it comes to, say, car repairs, and then they want to know how much for parts and how much for labour.
When dealing with smaller customers, it may be easier to lump it all together and give them one price. But make sure they know what that price includes.
For example, if you do two similar jobs where you charge $500 for one customer and $2,000 for the other, the $2,000 customer will think you just cheated them. You have to say:
“$500 is for one portrait and that includes editorial rights for two years.”
“$2,000 is for one portrait and that includes editorial and advertising rights for five years.” The customer has to know that they paid more because they got more.
Someone will always complain, “Why do I have to pay for more usage even though you already shot the picture?”
The answer is easy: “I’m running a business and that’s how I make money. I use the exact same business model as car rental companies and hotels.”
Remember that profit is not a dirty word. Everyone’s livelihood depends on it. You’re in business to make money, otherwise you’re a hobbyist.
>> re: “Do I add in usage which is included in my creative fee or do I create an additional line item? Say my creative fee for a minimum of 3 hours is $450. Should I throw in 1 year’s unlimited web use or should I add that as an additional line item fee?”
There are pros and cons to having separate line items rather than lumping the two together. Perhaps read this: www.warrentoda.com/toron…y-pricing/
Also, there’s no such thing as “web use”. That would be like offering “newspaper use” or “TV use”. The web is a medium not a use: www.warrentoda.com/toron…web-sites/